"The gravest dangers to liberty lurk in insidious encroachment by men of zeal, well-intentioned, but without understanding." - Justice Louis Brandeis

Friday, February 6, 2009

The history of government "stimulus" around the world

Anyone interested in whether a government "stimulus" package is likely to work should read this article. There is a long history of governments trying to reverse an economic downturn by increased spending, and the results aren't pretty. Among many examples:

"Overall during the 1990s, Japan tried 10 fiscal stimulus packages totaling more than 100 trillion yen. Yet from 1991 to 2006 Japan's economy grew slower than that of any of the other 16 countries listed in the US Statistical Abstract for comparison - even slower than Italy's.

Over those 16 years its GDP per capita grew just 16%. That of its Asian counterpart, South Korea, grew 94% in that same period. The US, Canada and most European countries grew at least twice as fast. And today Japan's government debt is 182% of its GDP, by far the highest of any developed country ."This is essential reading.